Despite the fact that millennials and generation Z will be the largest adult segments by the end of the decade, with an aggregated net worth of $24 trillion, wealth management firms are failing to appeal to the younger demographics, says Steve D’Souza.

Steve Dsouza

Wealth management firms are failing to appeal to a younger demographic simply because of a lack of digital advancement, especially when it comes to onboarding.

Recent research from Fenergo found that nine out of ten firms lacked self-service options for young customers. Plus, a majority of wealth management firms (80%) admit having made poor to no progress in achieving an integrated, straight-through onboarding processes.

Wealth managers should be concerned about losing customers because of inefficient onboarding. Young high net worth individuals (HNWIs) typically expect an onboarding time of around 20 days. Yet the research found that nearly one in three (28%) firms take longer than this to complete client onboarding, with half of these (14%) taking double the expected time or even longer.

Part of this can be attributed to the increasing amounts of information to achieve regulatory compliance, with wealth managers reporting data collection as the second most time-consuming element for them. Far too often, the onboarding process is manual and labour-intensive, which adds both time and complexity to client onboarding.

According to Calum Brewster, managing director and regional head of UK at Julius Baer, “If I look at the past ten or even five years, the number of data points that we require from a client to deliver a bespoke service and fulfil all our AML (Anti-Money Laundering)/KYC (Know Your Customer) and suitability obligations has grown dramatically to become very large indeed.”

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The increase in regulation and the subsequent extension in average onboarding times could lead many young clients simply to drop out and explore an alternative financial services provider, and this is a key concern for 52% of wealth managers, with 16% seeing this as a top-level threat to business growth.

How to address the client onboarding challenge

Smaller wealth managers in particular remain mired in manually-intensive client onboarding processes. Technology holds the key to automating much of the onboarding process, reducing both the burden on humans and the chance for error.

The Software-as-a-Service (SaaS) model for client onboarding technology offers financial institutions greater flexibility and control over costs. To be successful, it is essential that data is freed from siloes, such as the Customer Relationship Management (CRM) system, so that all stakeholders in the client onboarding process can share and benefit from relevant data. This avoids frustrating returns to the client for more information, but we find that little improvement has been made with integrating onboarding processes since 2014, with just 17% of wealth managers reporting a good level of automation.

The technology is there to enable previously disparate systems to talk to each other and share relevant information quickly, efficiently and securely. Adoption of these technologies reduce the time to onboard clients, improves the customer experience and provides valuable opportunities to upsell and cross-sell products and services. From an operational perspective it makes sense, too.

Wealth firms need to tap into technology to help with how they service their millennial and generation Z clients. The young generation of investors has come to expect an Amazon-like experience, so delayed onboarding times and other barriers to an optimal interaction will force them to go elsewhere. It’s imperative that wealth managers get ‘onboard’ with a digital client experience or they risk losing out on an entire generation of clients.

Steve D’Souza is the global head of Private Banking and Wealth Management at Fenergo, a provider of client and regulatory technology for financial services.